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Tax deduction on interest income: large co-operative societies must withhold tax when turnover and per payee interest exceed specified thresholds.
The amendment narrows exemptions in section 194A(3) so that a co operative society otherwise exempt under clause (v) or (viia) must deduct tax at source if it exceeds a specified turnover threshold in the preceding year and if the interest credited or paid to a payee in the financial year exceeds specified per payee thresholds, with separate thresholds for senior citizens and others.
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TDS on technical services adjusted to reduce classification disputes and align withholding with work contract payments.
To reduce classification disputes and litigation, the law prescribes a reduced withholding rate specifically for fees for technical services (other than professional services), aligning its TDS incidence more closely with that applicable to payments for execution of work contracts; withholding rates for other categories of fees remain unchanged and the amendment takes effect from the commencement date specified in the measure.
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Deduction timing for Section 43B: insured business expenses disallowed earlier permitted when actually paid.
A proviso is proposed to Rule 5 of the First Schedule so that any sum added back under Section 43B in accordance with clause (a) of Rule 5 shall be allowed as a deduction in computing income under the rule in the previous year in which such sum is actually paid; the amendment takes effect from 1 April 2020 and applies to assessment year 2020-21 and onwards.
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Attribution to Permanent Establishment now covered in safe harbour rules and advance pricing agreements, providing transfer pricing certainty.
Amendments expand Safe Harbour Rules to permit acceptance of declared transfer prices that address attribution of profits to a Permanent Establishment, and amend Advance Pricing Agreement provisions to allow APAs to determine or specify the manner of determining such attribution, thereby extending transfer pricing certainty to both safe harbour and APA mechanisms for future and rollback years.
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Business trust definition modified: listing requirement removed so tax pass-through and regime apply to unlisted trusts.
The proposal amends clause (13A) of section 2 to remove the requirement that units be listed on a recognised stock exchange for a trust to qualify as a business trust, aligning the income tax definition with SEBI amendments that eliminated mandatory listing for InvITs; under section 115UA such trusts remain subject to taxation rules including pass through treatment for SPV interest and rent and filing and reporting obligations.
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Carry forward of losses extended to statutory bank and government insurance company amalgamations under specified nationalisation schemes.
Section 72AA's allowance for carry forward of accumulated losses and unabsorbed depreciation is extended to include amalgamations of corresponding new banks under the Banking Companies (Acquisition and Transfer of Undertakings) Acts and amalgamations of Government companies arising under the General Insurance Business (Nationalisation) Act, with defined terms to be read from those enactments and the extension operating notwithstanding specified exclusions in the Act.
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Deferral of TDS on ESOP perquisites allows employers to delay tax deduction until sale or employment cessation.
Amendments permit eligible start-ups to defer deduction or payment of tax on ESOP perquisites: tax must be deducted or paid within fourteen days of the earliest of (i) expiry of the prescribed post-allotment period, (ii) sale of the specified security or sweat equity share by the employee, or (iii) cessation of employment. Tax is computed using the rates applicable in the financial year when the security or share was allotted or transferred.
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Non-resident return filing exemption extended to royalty and FTS when withholding tax is applied at prescribed rates.
A statutory amendment will exempt a non-resident from filing an income-tax return where the non-resident's total income consists solely of dividend or interest, or specified royalty or fees for technical services, provided that withholding tax on such income has been deducted under Chapter XVII-B at rates not lower than the rates prescribed for tax determination under section 115A(1); the amendment takes effect from the stated commencement date and applies to the relevant assessment year and subsequent years.
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Optional 35AD deduction safeguards right to claim depreciation where assessee forgoes the investment allowance under amended rules.
The amendment makes the 100% capital expenditure deduction under section 35AD optional and restricts the sub section (4) non allowance rule so that other deductions, including normal depreciation, are disallowed only if the section 35AD deduction has been claimed and allowed; the change applies prospectively to the assessment year beginning 1 April 2020.
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Safe harbour threshold for stamp valuation adjustments increased, reducing valuation-driven recharacterisation of consideration for transfers.
Increase of the safe harbour threshold from five per cent to ten per cent for valuation comparisons where declared consideration for transfer or receipt of immovable property is lower than the stamp valuation authority's value, so that a declared consideration within the safe harbour is treated as the full value for computing capital gains or income from other sources; effective from 1st April, 2021 and applying to the relevant assessment year and subsequent years.
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Interest limitation carve-out excludes debt from permanent establishments of foreign banks from interest disallowance under amended rules.
The amendment provides that the interest limitation will not apply to interest paid in respect of debt issued by a lender which is a permanent establishment of a non-resident engaged in banking in India, thereby carving out loans from branches of foreign banks from the section 94B restriction and avoiding application of the earnings based disallowance to such debt.
News Bills
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Concessional withholding tax extended and applied to municipal debt, enabling foreign investor interest relief within a renewed operative window.
Amendment to section 194LD extends the concessional withholding tax regime and applies the concessional rate to interest on municipal debt securities by Foreign Institutional Investors and Qualified Foreign Investors, preserving the reduced TDS rate for eligible interest payments and changing the operative period so that interest paid within the newly prescribed window qualifies for the concession, with the amendment taking effect from the start of the specified fiscal period.
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Concessional TDS rates on specified foreign borrowings extended and a lower rate introduced for IFSC listed bonds.
Amendment of section 194LC extends concessional withholding for interest paid to non residents on eligible foreign currency borrowings by a specified company or business trust, maintaining the concessional rate for approved loans, long term bonds and rupee denominated bonds within prescribed limits. It also establishes a lower withholding rate for interest on long term bonds and rupee denominated bonds issued from abroad that are listed solely on a recognised IFSC stock exchange, with the amendment operating from the commencement date specified in the Finance Bill.
News Bills
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Concessional tax for new manufacturers: generation of electricity treated as manufacturing allowing concessional rate subject to eligibility conditions.
The amendment clarifies that manufacturing or production for the concessional tax regime includes generation of electricity. Eligible new domestic manufacturing companies-set up on or after 1 October 2019 and commencing by 31 March 2023-that do not avail specified incentives or deductions may opt for the concessional tax provision. The change takes effect from 1 April 2020 and applies from the assessment year 2020-21 onward.
News Bills
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Offshore fund exemption relaxed: manager contributions initially excluded and corpus timing harmonised to reduce discrimination.
Amendments to section 9A relax two eligibility conditions for offshore funds' exemption from creating a business connection: contributions by the eligible fund manager during the first three years up to a capped amount will be excluded when calculating the aggregate participation of Indian residents, and funds established in the previous year must meet the monthly average corpus requirement within twelve months from the last day of the month of establishment or incorporation. The amendments take effect from 1 April 2020.
News Bills
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Deduction under section 80EEA extended to include additional loans, broadening affordable housing tax relief eligibility.
The proposal extends the sanctioning period for loans eligible for the interest deduction under section 80EEA for acquisition of affordable residential property, allowing additional loans to qualify subject to existing conditions, including the stamp duty threshold and cap on interest relief. The amendment takes effect from 1st April, 2021 and applies to the assessment year 2021 22 and thereafter.
News Bills
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Extension of approval period for affordable housing projects expands eligibility for full business profit deduction under section 80-IBA.
Extension of the approval deadline under section 80-IBA permits additional affordable housing projects to meet the statutory approval-timing condition for claiming a deduction equal to one hundred per cent of profits and gains from the business of developing and building such projects; the approval deadline is extended to 31st March, 2021 and the amendment takes effect from 1st April, 2021, applying to the assessment year 2021-22 and thereafter.
News Bills
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Startup deduction expanded: three-year relief selectable within first ten years and turnover eligibility substantially increased.
Amendment revises the start-up deduction so an eligible start-up may claim a three-consecutive-assessment-year deduction selectable within ten years from incorporation, and raises the turnover eligibility ceiling so the deduction applies where total business turnover does not exceed a substantially higher threshold in any previous year counted from incorporation; the change takes effect from the start of the next fiscal cycle and applies to subsequent assessment years.
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Exemption for strategic petroleum reserve income: income exempt if replenishment occurs within three-year period under government directions.
Exemption is provided to ISPRL for income arising from arrangements for replenishment of crude oil stored in its Indian storage facilities when replenishment is carried out pursuant to directions of the Central Government, subject to the condition that the crude oil is replenished within three years from the end of the financial year in which it was first removed from storage; effective from 1 April 2020 for assessment year 2020-21 onward.
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Exemption for sovereign wealth fund investments: dividends, interest and long-term capital gains eligible if conditions satisfied.
A new exemption applies to income in the nature of dividend, interest and long-term capital gains of a specified person arising from investments, debt or equity, in Indian companies or enterprises engaged in developing, operating or maintaining infrastructure facilities or other notified businesses, provided the investment is made on or before the prescribed cut-off and held for the minimum required period. "Specified person" includes a wholly owned ADIA subsidiary resident in the UAE and sovereign wealth funds satisfying defined ownership, regulatory, benefit, vesting, commercial activity and notification conditions.

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Review of Customs duty Exemptions - Review of conditional exemption rates of BCD

24 July, 2024

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Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

(i) The BCD exemption for the goods covered under following serial numbers of the notification are being extended upto 31st March, 2026 unless specified otherwise.

S. No.

S N of 50/17-Cus

Brief Description

1.

17

Specified Planting materials, namely, oilseeds, seeds of vegetables, tubers, etc.

2.

80A

Algal oil for manufacturing of aquatic feed

3.

90

Lactose for use in manufacture of homeopathic medicines

4.

104

Specified goods used in processing of sea-food

5.

133

Gold ores and concentrates

6.

139

Bunker Fuels namely: (i). IFO 180 CST; (ii). IFO 380 CST; (iii). VLSFO (CTH 27)

7.

150

Naphtha for manufacture of Fertilisers (scope of exemption is being reduced only to Naphtha)

8.

155

Liquefied petroleum gases (LPG) received from unit in SEZ and returned by the DTA unit to the SEZ unit

9.

164

Electrical energy supplied from SEZ unit to DTA

10.

165

Electrical energy supplied from SEZ to DTA

11.

172

Specified goods used in manufacture of silicon wafers or solar wafers, for manufacture of solar cell or module

12.

183

Medical use fission Molybdenum-99 (Mo-99) for use in manufacture of radio pharmaceuticals

13.

184

Pharmaceutical Reference Standard

14.

188

Goods for manufacture of ELISA Kits

15.

191

Maltol for manufacture of deferiprone

16.

204

Anthraquinone or 2-Ethyl Anthraquinone for use in manufacture of Hydrogen peroxide

17.

237

Specified material for manufacture of EVA (Ethylene Vinyl Acetate) sheets or backsheet, which are used in the manufacture of solar photovoltaic cells or modules (Scope of materials which can be imported is being increased)

18.

253

Specified Goods for manufacture of Brushless Direct Current (BLDC) motors

19.

257

Tags, labels, stickers, belts, buttons, hangers or printed bags, imported by bonafide exporters

20.

257A

Specified goods used in manufacture of handicraft items for export when imported by bonafide exporter

21.

257B

Specified goods used in manufacture of textile or leather garments for export when imported by bonafide exporter

22.

257C

Specified goods used in manufacture of leather or synthetic footwear or other leather products for export when imported by bonafide exporter

23.

258

Security fibre, threads, Paper based Taggant, M-feature for use in manufacture of security paper by Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt Ltd, Mysore.

24.

259

Raw materials for manufacture of security fibre and security thread for supply to Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt. Ltd, Mysore for use in manufacture of security paper

25.

260

Goods for the manufacture of specified orthopedic implants (902110)

26.

261

Raw material for manufacture of Copper-T Contraceptive

(i) Alatheon

(ii) Copper Wire

27.

265

Capacitor grades polypropylene granules for manufacture of Capacitor grade plastic

28.

269

Super absorbent polymer for manufacture of adult diapers and specified goods

29.

271

Polytetrametylene ether glycol, (PT MEG) for use in manufacture of spandex yarn

30.

276

Ethylene- propylene- non-conjugated diene rubber (EPDM) for manufacture of insulated wire and cables

31.

279

New or retreated Pneumatic tyres of rubber for use in servicing, repair of maintenance of aircrafts used for operating scheduled air transport service or scheduled air cargo service etc

32.

280

New or retreated Pneumatic tyres of rubber for use in servicing, repair or maintenance of aircraft imported or procured by Aero Club of India/ for flying training purpose/ operating non-scheduled (passenger or charter) services/ AAI for flight calibration purpose

33.

290

Wood pulp for manufacture of newsprint, paper or paperboard

34.

292

Goods imported for manufacture of paper, paper boards, newsprint

35.

293A

Newsprint and uncoated paper imported for printing of newsprint

36.

296A

Lightweight coated paper imported by actual users for printing of magazines

37.

326

Hydrophilic /Hydrophobic Non- Woven, imported for use in the manufacture of Adult Diapers

38.

329

Pile fabrics for the manufacture of toys

39.

333

Moulds, tools and dies, for the manufacture of parts of electronic components or electronic equipment

40.

334

(i) Graphite Felt or Graphite pack for growing silicon ingots (ii) Thin Steel wire used in wire saw for slicing of silicon wafers

41.

345A

Simply Sawn Diamonds

42.

364A

Spent catalyst or ash containing precious metals

43.

368

Ferrous Scrap

44.

374

Magnesium Oxide (MgO) coated cold rolled steel coils for use in manufacture of cold rolled grain oriented (CRGO) steel

45.

375

Specified items for manufacture of cold rolled grain-oriented steel (CRGO) steel

46.

378

Metal parts for manufacture of electrical insulators falling under heading 8546

47.

379

Pipes and tubes for use in manufacture of boilers

48.

380

Forged steel rings for manufacture of special bearings for use in wind operated electricity generators

49.

381

Flat copper wire for use in the manufacture of photo voltaic ribbon for manufacture of solar photovoltaic cell or modules

50.

392

Dies for drawing metal, where imported after repairs from abroad

51.

403

Parts and raw materials for offshore oil exploration

52.

404

Specified items including capital goods and raw materials for off shore oil exploration

53.

415

Parts for manufacture of catalytic convertors

54.

415A

Platinum or Palladium for manufacture of Noble Metal Compounds & Noble Metal Solutions

55.

416

Ceria zirconia compounds for use in the manufacture of washcoat for catalytic converters

56.

417

Cerium compounds for use in the manufacture of washcoat for catalytic converters

57.

418

Zeolite for use in the manufacture of washcoat for catalytic converters

58.

422

Machinery, electrical equipment for use in semiconductor wafer and LCD

59.

423

Machinery, electrical equipment for use in marking and packaging of semiconductor chips

60.

426

Specified goods for the manufacture of semiconductor devices, memory card, IC, solar cell

61.

435

Capital goods for printing industry

62.

442

Bushings made of Platinum and Rhodium alloy when imported in exchange of worn out or damaged bushings exported out of India

63.

446

Parts and components for manufacture of tunnel boring machines

64.

451

Evacuated tubes with three layers of solar selective coating for use in manufacture of solar water heater

65.

462

Ball screws for use in the manufacture of CNC Lathes

66.

463

Linear Motion Guides for use in the manufacture of CNC Lathes

67.

464

CNC Systems for use in the manufacture of CNC Lathes

68.

464A

Goods for manufacture of plastic processing machineries

69.

467

Parts and components of cash dispenser or automatic bank note dispenser

70.

468

Parts for manufacture of Micro ATM, Fingerprint reader/scanner, Iris scanner, Miniaturised POS (Scope of exemption is being limited to import of raw materials only)

71.

471

All parts for use in the manufacture of LED lights

72.

472

All inputs for use in the manufacture of LED driver or MCPCB for LED lights

73.

476

Television equipment, cameras etc for taking films, imported by a foreign film unit or television team

74.

477

Filming equipment of foreign origin if imported into India after having been exported therefrom.

75.

480

Goods imported for being tested in specified test centers

76.

489B

Goods for manufacturing of Microphones

77.

504

Parts and Components of Digital Still Image Video Cameras

78.

509

Parts, components and accessories for manufacture of Digital Video Recorder

79.

510

 Parts, components and accessories for use in manufacture of reception apparatus for television

80.

511

Parts, components and accessories for manufacture of CCTV Camera

81.

512

Specified Parts, components and for use in manufacture of Lithium-ion battery and battery pack

82.

512A

Inputs, parts or sub-parts for use in the manufacturing of Printed Circuit Board Assembly

83.

515A

Open Cell for manufacture of TV Panel

84.

516

The following goods for use in the manufacture of Liquid Crystal Display (LCD) /LED TV Panel

85.

517

Magnetrons for manufacture of domestic microwave ovens

86.

519

Raw materials or parts for use in manufacture of e-Readers

87.

523A

Parts, sub-parts, inputs or raw material for use in manufacture of Lithium-ion cells

88.

527

Lithium-ion cell use in manufacture of battery or battery pack

89.

527A

Lithium-Ion Cell for use in manufacture of battery or battery pack of cellular mobile

90.

527B

Lithium-Ion Cell manufacture of battery or battery pack of EV

91.

534

Parts of gliders or simulators of aircrafts (excluding rubber tyres and tubes of gliders)

92.

535

Raw materials for manufacture of aircraft and parts of aircraft

93.

535A

Parts of aircraft for manufacture of aircraft or for manufacture of parts of aircraft by PSU under Min of Defence

94.

536

Parts, testing equipment, tools and tool-kits for maintenance, repair, and overhauling of aircraft, components or parts of aircrafts

95.

537

All goods of Heading 8802 (except 88026000-spacecraft)

96.

538

Components or parts, including engines, of aircraft of heading 8802

97.

539

(a) Satellites and payloads; (b) Ground equipment brought for testing of (a)

98.

539A

Scientific and technical instruments etc for launch vehicles and satellites

99.

540

Specified goods imported by scheduled air transporter

100.

542

Specified goods imported by Aero Club, Flying Training Institutes

101.

543

Specified goods imported by non-scheduled air transporter

102.

544

Parts (other than rubber tubes), of aircraft of heading 8802

103.

546

Parts (other than rubber tubes), of aircraft of heading 8802

104.

548

Barges or pontoons imported along with ships

105.

551

Cruise ships, Excursion ships

106.

553

Fishing vessels, Tugs and Pusher crafts, light vessels excluding vessels and floating structure imported for break up

107.

555

Vessels like warships, lifeboats excluding vessels and floating structure imported for break up

108.

567

Stainless steel tube and wire, for manufacture of Coronary stents /artificial valve

109.

569

Parts required for manufacture of Ostomy products

110.

570

Medical and surgical instruments, apparatus and appliances including spare parts and accessories thereof

111.

575

Specified Hospital Equipment for use in specified hospitals

112.

578A

Raw materials, for the manufacture of Cochlear Implants

113.

580

X-Ray Baggage Inspection Systems and parts thereof

114.

581

Portable X-ray machine / system

115.

583

Parts and cases of braille watches, for the manufacture of Braille watches

116.

591

Parts of electronic toys

117.

593

Parts of video games for the manufacture of video games

Note: Description of entries is indicative. Notification may be referred to for complete description.

(ii) The BCD exemption for the goods covered under following serial numbers of the notification no 50/2017-Customs is being extended upto 31st March 2029.

S. No.

S. No. of 50/2017Cus

Brief Description

1.

212A

Medicines/drugs/vaccines supplied free by United  Nations International Children's Emergency Fund (UNICEF), Red Cross etc

2.

213

Drugs and materials

3.

428

Specified goods imported by accredited press cameraman

4.

429

Specified goods, imported by accredited journalist

5.

549

Capital goods, raw materials and spares for repairs of ocean-going vessels

6.

550

Spare parts and consumables for repairs of ocean going vessels registered in India.

7.

577

Lifesaving medical equipment for personal use

8.

607

Life Saving drugs like Keytruda etc

9.

607A

Lifesaving drugs/medicines for personal use

10.

611

Archaeological artefacts for exhibition in a museum

11.

612

Specified raw material for sports goods

Note: Description of entries is indicative. Notification may be referred to for complete description.


Full Text:

Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

Topics

Acts Income Tax